There is no project without some degree of risk and uncertainty. Taking a proactive approach to risk management cannot eliminate risks, but it greatly increases the chances for successful completion of the project. Looking from a broad perspective, risk management truly represents the essence of project management. Continuous, robust and disciplined risk management processes reduce the probability and impact of negative events or conditions and, at the same time, take advantage of any potential opportunities. A Guide to the Project Management Body of Knowledge defines project risk as “an uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives.” While risk management tools and techniques for identifying, assessing and responding to both positive and negative risks are similar, project risk management typically deals with negative risks or threats. It is not surprising that organizations, project stakeholders, teams, and individuals have varying degrees of risk tolerance. Readiness to accept certain risks often depends on the perceived balance between the risks and potential benefits. Since no project takes place in isolation, understanding the risk tolerance levels and attitudes towards risk is an important aspect of project risk management. Fundamental project risk management process steps are outlined below.
